Do we really need new email clients? Maybe. But what if we used the ones we have for communicating, and moved all the content within our messages to tools better suited for managing information and tasks?
Smart perspective. What would an application look like that’s for storing tasks and related files from email? How would it integrate with mail clients?
Hulu Plus is now available on Apple TV.
Great news. Apple TV is quietly becoming a must-have TV device. iTunes, Netflix, Hulu Plus, MLB, NBA, NHL and AirPlay all on one little device is awesome. If Apple could get the NFL on it, too, they would dominate the television.
So what bugs the crap out of me is that developers are whining about not making enough money, when they are the ones in charge of the pricing. If you need more money per customer to hack it, charge more. If people aren’t willing to pay that, well, unfortunately you have your answer.
People will pay for good software, the Omnigroup proves this point, but you have to offer compelling and unique software in order to demand such prices. I am not saying that App Cubby thinks it is the consumers fault, but it sure sounds like that to me — and that bugs me. I don’t like when people charge too little to make a living and then complain about charging too little.
Good thoughts, but it’s worth considering that his example of a company’s that been successful selling good software at relatively high prices, Omni Group, isn’t solely dependent on iOS sales. Omni Group sells a number of Mac applications and has for years, and while they have moved to the Mac App Store, they also may have a significant amount of upgrade revenue as a result, something iOS developers (without implementing an In App Purchase system) don’t have access to.
I want to be clear that I have no idea what Omni Group’s revenue breakdown is like. It’s possible that sales from their website and upgrade revenue from it is now an insubstantial part of their overall revenue, which would support Ben’s contention. But it’s also quite possible that it is a significant portion.
I don’t want to distract from Ben’s point, which is that we (developers) need to price their applications at a level which will provide enough revenue to survive.1 But it should be pointed out, because having access to upgrade revenue would make selling applications for a one-time price much more viable.
Google will be launching Google Fiber in Kansas City, Missouri soon.
What they’re offering sounds incredible. For $0 per month (free!), people can get 5 Mbps down and 1Mbps up. For $70 per month, customers can get 1 Gbps up and down. 1 Gbps.
This is the kind Google we all were so excited about around 2004 and 2005: making fantastic products or services that completely upend other businesses, to help people.
Dylan Matthews argues against Thiel’s thesis that innovation is only occurring in software and finance:
Generally, an industry is innovating if total factor productivity is going up, since that indicates that technology in that sector is improving.
…
But software and custom programming have innovated at roughly the same pace as manufacturing, trade and agriculture — the sectors Thiel alleges are banned from innovating. Information services actually wasn’t innovating until about 2000, when companies began to figure out how best to profit off this crazy Internet fad. Since then, it’s been innovating roughly as fast as manufacturing and other non-tech, non-finance sectors.
Good point, but of course this obscures something important. Productivity measures how good we are at converting labor and capital into goods and services, but it says nothing about how well we’re converting our labor and capital into new and better goods and services. Software and Internet services may not be improving productivity much, but I think there’s a very good argument that most of our gains in the last decade with software has been in making much better, much more useful devices, applications and services.
A programmer may only be marginally more productive in 2010 than they were in 2000, but they’re creating things like iOS, Yelp and Facebook. Whether it shows up in the statistics or not, there’s great gains there.
Peter Thiel offers his explanation for stagnation:
So, I think we’ve basically outlawed everything having to do with the world of stuff, and the only thing you’re allowed to do is in the world of bits. And that’s why we’ve had a lot of progress in computers and finance. Those were the two areas where there was enormous innovation in the last 40 years. It looks like finance is in the process of getting outlawed. So, the only thing left at this point will be computers and if you’re a computer that’s good.
This is from a discussion (loosely used) between Thiel and Eric Schmidt at Fortune Brainstorm Tech earlier this month. Fascinating to read.
Still, the productive capacity of these technologies was such that we coasted all the way into the 1970?s before the deadweight of government regulation and taxation slowed us down. Since then, our resources have shifted to developing technologies of resistance, which is why Brynjolfsson and McAfee see accelerating innovation. It is accelerating, but it’s accelerating in a very specific area because of how difficult it is to control that particular area.
We do see welfare gains from innovation in the technologies of resistance, but they are not nearly as big as we could get with the technologies of control, were they not so bogged down with regulation. Resources are spent on creating robustness against control that would have otherwise been spent on maximizing pure economic growth, in the absence of efficiency-reducing regulation.
Software and finance.
(Via Tyler Cowen.)
We need to reframe this argument. The real issue is much deeper than this specific acquisition. The real issue is the sudden vulnerability we feel now that one of our theories about independent app development has failed.
Exactly.
Faruk Ates responds to Matt Gemmell’s Entitlement and Acquisition:
There is an implicit promise in the act of doing business. It is a promise of respect and mutual trust, where the business offers the customer something of value, for which the customer pays money. The free-but-paid-with-advertising model has made this promise blurry, but not absent. When a company sells itself to a bigger company as a talent acquisition, leaving the product—and, consequently, its customers—out in the cold as a result of this acquisition, it is a reneging on that implicit promise.
It is disrespectful towards customers to say “I am going to charge you for this product” only to then revoke the product later on; that is what is called a loan, a temporary use of a product or service.
The general thrust of Faruk’s piece is absolutely dead-on, but I don’t think a one-time purchase of an application—much less an App Store app at App Store prices—entitles the customer to future upgrades. It certainly entitles them to updates—fixes to the application they purchased, which means it better fulfills its original promise—but not future upgrades, or new functionality. Why should it? That was never the norm on the desktop; customers purchased a version of an application and paid for new versions in the future.
The App Store changed this a bit, of course, because all new versions, whether bug fixes or major new versions, are free. But why, then, is Sparrow’s acquisition—which effectively means the application will not be developed further as-is—a violation of the “promise of respect and mutual trust” between them and their customers? The application customers purchased is still on their iPhones and Macs. The application still works as it did when they purchased it. The only thing that’s changed is they will not receive future major upgrades.
Customers are disappointed because their expectations will not be met. When they purchased Sparrow, they expected to receive future upgrades, too. They expected this because that’s the norm for the App Store. But I don’t think it’s fair to say that, because that expectation was reasonable based on unofficial and unstated norms, the Sparrow team violated their trust by stopping development. If that were the case, how many major upgrades should be expected? One? Two? Three?
There’s no way to answer that question, because that was never a part of the promise made when customers purchased Sparrow. All they promised was what they advertised—a well-designed email client, which is precisely what customers received. Customers have a right to be disappointed. I’m disappointed. But I don’t think it’s fair to say the Sparrow team violated their customers’ trust.
That doesn’t mean, though, that it’s a good situation. It isn’t at all. It sucks for customers that an application they like and have come to rely on will, at some indefinite point in the future, stop working for them and will not improve. This problem, though, has to do with the App Store’s structure. The fact is when charging for upgrades isn’t possible and isn’t expected, it’s difficult to make an application like Sparrow and succeed. Very difficult. We should spend our time trying to solve that problem, so more small developers can make a living building well-made, useful, focused applications on these new devices.
Matt Gemmell responds to complaints over Sparrow’s acquisition that customers “invested” in the app and future updates:
You paid $10 for the Mac version, or $3 for the iOS version. Go ‘invest’ in a magazine and a coffee. They owe you nothing.
The Sparrow acquisition nicely highlights the App Store’s central problems. Presumably, Sparrow wasn’t profitable enough for the makers to continue developing it as an independent business, so they sold it. Customers, having paid less than a good dinner for the Mac and iPhone apps, are angry because they assumed that by purchasing the apps, they would receive all future versions of the apps.
These problems are related. It’s difficult to successfully sell something like Sparrow—a complicated, ambitious application—when customers are willing only to pay relatively small amounts for the application in the first place, and are, on the whole, entirely unwilling to pay for subsequent upgrades.
There’s something important to learn here: since the App Store’s primary customers are mass-market, they don’t yet value apps very much, and are therefore only willing to pay a pittance for apps. For them, apps are simply entertainment, sometimes a bit more, but not much more. Perhaps that will change as these mobile devices increasingly replace the PC, perhaps not. But what’s also clear is that trying to sell a focused, obsessed-with-the-details app for mass-market prices probably isn’t going to work. There are exceptions, but on the whole, it’s not a very good idea.
Guy English explains the difference between an “app” and applications:
“Apps” is fun. It’s fun to say, it sounds unthreatening, it’s a word sufficiently abbreviated that it takes on a life of its own without dragging to the forefront of peoples minds the more sterile and technical sounding “application”. Apps are not Applications – they are their own things. They are smaller. They are more fun. Apps are treats atop your technological sundae. They are not potential time sinks. They are neither burden nor investment. They each represent a nugget of fun, of fleeting amusement. Apps are gobbled up in the millions by people who would never rush so willy nilly to buy desktop software. Apps are Pop Software writ large in blinking neon lights.
Are Apps good business? No, they’re not. From a small developer’s perspective the App Store is a total disaster.
He wrote that in 2010, but it’s important to remember when thinking about Sparrow’s acquisition. When something has to be a hit for it to be a success, it’s going to be difficult for smaller market, detailed apps to exist.
Jack Cheng is writing a novel, and you can support it on Kickstarter. You can read a description of the story and an excerpt. It’s excellent. I’ve backed the project and I can’t wait to receive the book.
CNET’s Greg Sandoval wrote a very good profile of Netflix’s ill-fated attempt to spinoff their DVD rental business into a separate company. Sandoval writes:
Hastings has an unwavering belief that streaming video represented the future of home entertainment. He argued that in times of technological advancement companies that had succeeded at one business often clung too tightly to tradition and to what had made them successful. And then they were toast. He didn’t want that to happen to Netflix.
Netflix’s CEO and co-founder, Reed Hastings, wanted to separate the DVD rental business because he believes online streaming is the future of video and wants to focus on the company’s future. His logic is sound; resources spent on the DVD rental business are resources that can’t be used for their streaming business and internal processes for the two businesses are very different. Worse, by allowing rentals to remain a central part of the company and therefore its culture, Netflix’s ability to move forward with streaming and innovate based on it is threatened. A company whose resources, processes and culture are focused on a dying business could die with it.
Hastings intended to separate the two businesses as quickly as possible so Netflix could begin focusing on its future. Because Netflix offered a subscription plan with unlimited DVD rentals and unlimited streaming, doing so meant breaking these plans into two separate subscriptions. Netflix broke the existing, $10 per month plan into two $7.99 plans. As a result, if customers wanted to retain rentals and streaming, they would have to pay nearly $16 per month—a 60% increase in price.
Customers, understandably, were enraged. Netflix lost 800,000 customers as a result and their stock collapsed. Just 3 weeks after announcing the spinoff plan, Netflix scuttled it.
Netflix ran head-first into the innovator’s dilemma: their existing customers, and their own processes and culture, make it very difficult to adopt innovations which will disrupt their existing business. In this case, Netflix is in a bit of an interesting position, because they are involved in both the existing and disruptive businesses. Customers revolted because streaming doesn’t meet their needs—streaming can’t compete with DVD rentals on its terms because there isn’t a large enough selection to do so.
Netflix’s larger strategy for streaming is to expand selection, but also to offer exclusive television shows. This strategy is sound, because it offers different value than DVD rentals and thus can stand on its own. There’s less need to compete directly with DVD rentals—something it cannot yet do—if Netflix streaming is the only way to watch several excellent television shows. By doing so, and continuing to grow their subscribers, Netflix should be able to demand more content from studios. This creates a process where the service becomes increasingly comparable to DVD rentals, and at some point, will become good enough and can replace it.
I don’t think Hastings’ error was in attempting to separate the two businesses and separate the subscription plans. Rather, I think he made two mistakes. First, publicly separating the businesses into two separate companies so soon was a mistake. Netflix would have been better served by separating the two businesses internally and making the DVD rental business a more or less autonomous unit so management could focus on streaming.
Second, and most damaging, I believe Hastings separated the subscription plans too hastily and underestimated how angry customers would be. He knew they would be angry, but figured it would be temporary; what he didn’t realize is that because streaming could not compete with rentals on its own terms, customers felt forced to choose between a substantial price hike or losing a service they were used to. Choosing streaming-only was not an option for most people. And then, just a couple months later, Netflix lost Starz, and with it, a substantial amount of their important streaming selection. This was extraordinarily bad timing; customers had to choose between a price hike and degraded service, and then the service became even worse just a couple months later. Extraordinarily bad timing that could have been avoided.
Instead, Netflix could have waited until next year to break apart the subscriptions, after their original television shows premiered. This has the advantage of separating them when the streaming service offers unique value to customers. Rather than choose between paying more and degraded service, customers would rather be choosing between DVD rentals (watch anything and everything, but deal with discs and the mail), and streaming (watch it immediately, and watch excellent television shows that you can’t watch anywhere else). That’s a fairer fight, and one where customers aren’t going to feel as screwed, because streaming now has its own value.
Of course, customers would still be angry, and many would still leave. That’s inevitable, because Netflix is at a juncture between the past and future. But by breaking them apart after streaming becomes a truly disruptive innovation (when it’s coupled with exclusive content), Netflix could begin growing its streaming subscribers with future customers, rather than past customers. The people who will subscribe to streaming are going to be largely different than the people who subscribed to DVD rentals. People who subscribed to DVD rentals largely did so in addition to a cable subscription, but the people who will subscribe to Netflix in the future (they hope) will do so to replace cable subscriptions.
In other words, by timing it with when their streaming service becomes something truly unique, Netflix could also begin separating their subscribers into two different groups, past and future, which should have been one of their goals from the beginning of this failed transition.
This wouldn’t have solved the problem, of course. Indeed, the same result might have occurred; Netflix is in a very difficult predicament, because it’s stuck between its past and future, with customers, processes and culture all working against it. It’s not easy disrupting yourself.
Vivek Wadhwa writes about the future of manufacturing:
Neil Jacobstein, who chairs the AI track at the Silicon Valley-based graduate program Singularity University, says that AI technologies will find their way into manufacturing and make it “personal”: that we will be able to design our own products at home with the aid of AI design assistants. He predicts a “creator economy” in which mass production is replaced by personalized production, with people customizing designs they download from the Internet or develop themselves.
Fascinating to think about. A world where manufacturing uses very little labor frees up millions of people to do other things, and would make it even more important that we redesign our education system.
That’s all “post-PC” means: a move from manual wired to automatic wireless connections between devices, where syncing, computing, and notifications can all be done through communication between client apps and backend services. It’s the end of the PC’s hegemony over the computing universe, not its death and decay. That’s what Jobs meant by it, and what Tim Cook means by it. Fundamentally, it means exactly the same thing as Bill Gates and Steve Ballmer and everyone else at Microsoft has always meant by “PC Plus.”
Carmody’s point is that both Apple and Microsoft’s vision is of many computing devices which we use to access our data through the Internet. That much is true, but Carmody misses the point. As John Gruber wrote today, Apple’s vision has little to do with what hardware or means of input we use. Those are details. Apple’s vision is to make computing so easy, so simple, that it doesn’t feel like we’re using “computers” at all in the sense we’ve been used to in the last couple decades, so people don’t have to think about which device they should use or how the application works—all they need to think about is what they’re trying to do.
I wrote this in April 2011:
The technology is a means to an end, and it is best hidden away, so the device’s purpose becomes one-and-the-same with the device itself. Apple’s vision for post-PC devices is not to make personal computers mobile. Apple’s vision is to make the technology so seamless, so effortless to use, that people forget they are even using a computer—so invisible that all people see is the web, or their book, or their movie.
Apple is seeking to make the technology irrelevant, so we can use these devices to do—to make, to create, to be inspired from. Don’t worry about what processor or display it has. Just read. Just write. Just draw. Just do.
That’s Apple’s vision for what the future of computing should look like. They have no religion on which form-factors or means of input are best—what’s best is whatever best achieves their goal.
Microsoft’s Metro user interface certainly could help do the same thing, but I don’t think it’s at all clear that Microsoft shares Apple’s intent. My impression, from Microsoft’s actions with Windows 8 and the Surface tablet, and the Surface event, is that Microsoft’s vision for the future is much as Carmody describes, but the PC also takes the form of a tablet that can switch between the normal Windows desktop environment with keyboard and mouse we’re used to, and the Metro interface—the power of the traditional PC and ease of use and convenience of touch-based tablets all in one device. In other words, Microsoft wants to retain the traditional PC as we’ve known it while allowing for an easier to use touch interface, too.
Perhaps Microsoft’s goal is to wean users off of the traditional keyboard-and-mouse-driven Windows interface and move them to a Metro interface that works well for touch and keyboard and mouse input. That’s possible, but that’s not how they presented the Surface at the June 19th event. Traditional Windows played a large role in the event and how they pitched the Intel version as being a “workstation with the power of a desktop PC” when docked with a desktop display. “No compromises” is what they promised.
Microsoft, then, is attempting to extend the PC into different areas through new form-factors while maintaining the PC interface (both software and hardware) as we’ve known it for its power. This fundamentally maintains the PC’s intent as we’ve known it, whereas Apple’s vision is to change it altogether.
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